- The State operates under a single fiscal year that runs from July 1st to June 30th
- Maryland has a strong Executive budget model
- The Legislature can only cut or restrict funds in the budget, and cannot increase or transfer funds to other purposes
- The Legislature can add to its own budget or to the Judiciary
- Development of the budget is primarily an executive task. The Governor formulates the budget and supplemental budgets. The Department of Budget and Management (DBM) supervises the executive budget-making process.
- The process starts about 15 months before the start of the budget year. At this time DBM develops budget instructions for use by agencies in preparing their budgets, and develops a maximum agency request ceiling for each agency. The request ceiling limits the amounts of general funds an agency may budget. The ceiling attempts to tailor the amount requested to the funds available while providing some flexibility to the Governor. The ceiling may or may not reflect amounts needed to:
- Maintain current services;
- Support operations of new facilities;
- Implement enacted legislation; and
- Annualize programs initiated in the current budget year.
- Agencies are directed to submit budget requests to DBM on a staggered basis throughout the fall of each year. Agencies may also request additional funds for new or expanded programs "over the ceiling" or above the amounts needed to maintain current services. Throughout the fall, DBM staff review agency requests and "over the ceiling" items and make recommendations to the Governor.
- Final decisions on the budget are not typically made until the new year. This is because the Board of Revenue Estimates does not report its estimate of revenues to be available for expenditure in the budget year until mid-December. In addition, the legislature's Spending Affordability Committee, which advises the Governor as to its spending limit, reports in December.
- The amount the Governor determines should be included in the budget bill and budget books becomes the Governor's Allowance when the budget bill is introduced.
The budget, or Governor's Allowance, must be submitted by the third Wednesday in January or by the 10th day of session if it is the first year of a new term of office. The budget bill is introduced in both chambers, and contains:
- Appropriations for each agency by fund source for the next fiscal year;
- Deficiency appropriations (which provides additional funding for expenses in the current fiscal year) by fund source;
- Salary detail listing the grade, step, and salary for positions in the flat rate and executive pay plans; and
- Additional sections that pertain to the entire budget.
The Governor must submit a balanced budget to the legislature in January of each year for consideration. The budget may be balanced assuming proposed revenue that currently is not being collected by the State.
- The amounts in the Governor's Allowance may be altered by legislative action to reduce or restrict particular appropriations. The legislature may not add to the budget or move money from one program to another. After introduction of the budget but before final action on the budget, the Governor, through introduction of a supplemental budget may reduce or increase the budget.
- Supplemental budgets permit the Governor to correct errors or omissions in the original budget and are used to appropriate new spending (i.e. either re-appropriating funds deleted by the General Assembly or appropriating new revenues based on revisions by the Board of Revenue Estimates). Although customarily accepted, supplemental budgets may only be attached to the budget by consent of the legislature.
- While the legislature can not add to the budgets of the executive branch, it can add to the legislative and judicial budgets.
- Funds cannot be redirected to other purposes by the legislature. Appropriations for debt service, statutorily mandated support for public schools, and salaries in effect for constitutional officers may not be reduced. Mandated funding for any program can be reduced, although funding related to primary/secondary education programs required by statute can only be reduced in conjunction with changes to statutory programs via separate legislation.
- For each legislative session, the House and Senate alternate which chamber will move the bill.
- Legislative procedures include:
- Subcommittee hearings.
- Subcommittee decision meetings to adopt actions.
- Subcommittee reports to the full committee.
- Full committee decisions.
- Floor debate.
- Passage and consideration by the second chamber.
- Conference committee.
- After passage of the conference committee report by both chambers the budget is enacted and does not require the Governor's signature. Passage in April allows access to deficiency appropriations in the current fiscal year.
- The budget must be enacted by the 83rd day of session. If this does not occur, the Governor issues a proclamation calling for an extended session should the budget not be enacted by the 90th day.
- The Governor may not veto the operating budget or line items within it.
- In addition to budget action, the legislature may increase State spending through a supplementary appropriation bill. Under this legislation, the legislature raises a tax and directs its revenues to a particular purpose. Supplementary appropriations may only be considered after enactment of the budget bill, and are subject to veto. Bond bills, for example, are considered supplementary appropriation bills.
- The budget has the force of law for only one year, while it is in effect during the fiscal year that runs from July 1 to June 30 each year.
- If revenues are needed to pass a balanced budget, the Governor or the legislature may consider a reconciliation act. The reconciliation act is not subject to the same rules as a budget bill and typically is considered at the same time the budget is considered. They have become a fixture in recent years as the State continues to face budgetary challenges.
- Final legislative action establishes the legislative appropriation for each budget program. For practical purposes this refers to the amount of funding as of the first day of the fiscal year, or July 1 in Maryland.
- The Governor may alter appropriations in the course of the fiscal year by budget amendment. Once amended during the fiscal year, the legislative appropriation becomes the working appropriation. The following general rules apply:
- Funds may not be transferred from one agency to another unless specifically authorized by law or general funds are transferred from the Contingent Fund in the Board of Public Works.
- The total amount of general fund appropriations in the budget may not be increased.
- Special, federal, and higher education fund appropriations may be increased, subject to legislative review if the revenues are available. Amendments over $100,000 are subject to legislative review.
- The Board of Public Works at the request of the executive branch may create positions during the course of a fiscal year. Budget bill language typically limits this authority to the addition of 100 State-funded positions. There is currently no limit on the number of non-State funded positions.
- The Governor may reduce an agency's appropriation during the fiscal year by up to 25% through BPW, to address shortfalls in revenue. As interpreted by the Attorney General, the 25% reduction applies at the agency level (so entire programs within an agency can be cut by more than 25%) and applies to the total appropriation at each point in time in case of multiple rounds of reductions. The Governor may not reduce funding through the BPW for debt service, the Legislative or Judicial branches; K-12 education (including the Schools for the Deaf and Blind), and salaries in effect for constitutional officers.
- Non-budgeted agencies such as the Maryland Transportation Authority or the Maryland Environmental Service do not have appropriations. They are self-funded and depend on their own revenue for agency operations. The Governor submits information on the annual budgets of non-budgeted agencies and DLS prepares an analysis of non-budgeted agencies for informational purposes only.
Closeout is the process of closing the books on a fiscal year (July 1 to June 30). In this process appropriations are booked as:
Expended (obligation incurred and payment made).
Encumbered (obligation incurred but payment not made).
Reverted (unexpended and unencumbered general funds) or canceled (unexpended and unencumbered general funds).
- Process and Spending Affordability Committee (SAC) established by Chapter 525 of 1982
- SAC is made up of an equal number of Senators and Delegates (currently 10 each) plus 2 citizen members
- The SAC makes an annual non-binding recommendation for ongoing budget growth each December
- Spending has been constrained to the recommended limit in all but one year since 1982
Budget publications created for the fiscal year are organized into the following categories:
"Operating Budget" publications analyze and summarize the state's operating budget, excluding the analysis documents.
"Operating Budget - Analysis Only" publications analyze and summarize the state's operating budget, analysis documents only.
"Capital Budget" publications analyze and summarize the state's capital budget, excluding the analysis documents.
"Capital Budget - Analysis Only" publications analyze and summarize the state's capital budget, analysis documents only.
"Shared Operating and Capital Budget" includes publications that apply to both budgets.
"Spending Affordability" includes publications that have been presented to or produced by the committee.
"Other" budget related publications.